$53 Trillion and Growing

[LegendKiller]

Originally posted by: bamacre
Fed to print more money

And down goes the dollar.

And you would rather have them react how?

let's say that they don't change.


1. The stock market would decline by 500pts in the first day, probably bottom out somewhere around 11,500.

2. The financial markets would *stop*. Nobody invests into a downturn, thus nothing would happen.

3. The debt markets would stop. My own market (ABCP) would screech to a halt, everything from trade receivables to student loans would no longer be funded.

4. Even if loans got funded, it would be a 6-7% interest rate, for overnight funding. That would decreases revenues so quickly as to cause another 30-40bn in revenue write-downs from all major finance companies.

5. All major finance companies would instantly stop lending money, or jack up the rates so high as to make it impossible for anybody but essential borrowers to transact.

6. Since funding costs are high and money is difficult to find, all companies would be effected, from your local hardware store to JPMorgan. Everything would screech to a halt.

7. Massive layoffs would occur. I am not talking 1% additional unemployment over the next 24 months, but 1% over the next 3 months.

8. repeat this cycle, as the financial markets absorb the fact that 1% of the population, around 15-20 million people, just lost their job in 3 months. Bankruptcies would skyrocket, losses would skyrocket, and companies would let go more people, repeating the cycle.

9. Within 6-12 months this country would be in a depression, which would be over-corrected for, resulting in probably 5-10 years of either depression or economic malaise.


or


1. You glide the economy down, dinging the dollar, but not killing it, watching inflation but not spiking it, to an eventual mild recession and maybe even a moderate to severe one, which lasts only 6-12 months.


Dunno, sounds like they might have the right plan.

 

[bamacre]

But isn't this just proof that the system needs changing?

If they don't act, we have a bigger chance of a recession, but the only way to act is to lower the interest rate, which means they print more money, which means the dollar goes down even further.

I mean, it sounds to me like we are fucked either way.

 

[ranmaniac]

If there ever is a depression or worse than 29', I imagine there would be a lot of yuppie suicide.

 

[lozina]

Originally posted by: LegendKiller
1. Gold is deflationary, it has a tendancy to be deflationary since the value is not set by a group, or a person, but by the market. It cannot be controlled by the market, but is left to it's own devices. As such, since it's usually in greater demand than supply and deflationary in the pricing.

2. Yes, "golds value will be set". Sorry, we don't set gold's value, the market does. As such, if everybody in the world bought gold to back their currency, then gold would increase infinitely. See, the problem is that gold's price can be much higher than anybody's price to pay for it. To acquire gold for the backing of currency you'd have to run everybody out of the market. Even if you revalued everything lower or pegged x dollars to y gold, you'd still have an ever-increasing amount of gold needed to contain the wealth generated. It's not that the dollar is inflated that is the problem, but you cannot contain infinity with a finite source. The amount of wealth that can be generated is constrained only by the rate at which it can be generated, not the length of that time. As such, eventually you will run out of gold, either that or you will drive the price up so far that industries that depend on it would go out of business. The primary users of gold would just be governments.

3. ROFL. This is where you guys fall apart. You somehow think that inflation is only contained within the amount of currency issued. Sorry, but did the issuance of dollars (inflation by your own standard) since March-07 cause milk to go up by 40% over the same time period? What about the continual input of services into the model? If somebody requires x% raise, then where does that raise come from? Perhaps an increase ni the price of the output?

What about minimum wage? Doesn't the increase in the manditory wage also cause an increase in the manditory price of output?

You see, any increase in an input that can be passed onto the consumer (depending on the elasticity of demand) will be passed onto the consumer, causing inflation. Now, if the rate at which the price of inputs increases does not keep pace with the pace of wages, then real wages decline.

This is where your nickel for a pop fails. How big was the pop back then? How much is it in adjusted dollars? What was your wage back then? Was your % of wage spent on the pop the same as now, less? More?

You people always talk in absolutes, yet never include adjustments for increased quality, decreased financing prices (risk spreads have improved dramatically due to the Fed and increased inflation and economic stability).

What's funny is that I did state that gold is deflationary, but what you missed completely was that even when gold was deflationary we had deflation *and* inflation. Thus, if gold cured all inflation, how did inflation exist? If inflation were 90% caused by a fiat currency, then how could it have existed, ever, in the past?

Yes, fiat currencies cause inflation, because it's *GOOD* to have a certain amount of it. A predictable amount of inflation keeps prices in check, which aids in the projection of goods and services needed. It also increases stability of the financial markets, economic growth, and the overall transparency of the economy. All of this spurs confidence in the system and knowledge that there will not be wild perturbations inside of the system. All of that causes good will and the willingness to spend and invest, both by foreigners and domestics.

*THAT* is one key reason why we have the strongest and longest running economy in the world. Not because we are smarter, or we have better strength, but because we have mastered the ability to administer our economy in a consistent, transparent, and robust way. Overall, in relative comparison to every other economy in the world, we have the most stable and transparent financial system ever.

That is why everybody has copied the system and realized that gold is antiquated and inefficient.

1 & 2-

You don't seem to understand how the gold standard works. the value of the currency is pegged to a fixed amount of gold- held in the countries treasury. A certain amount of gold is redeemable for a certain amount of gold. How can the value of gold in dollars jump around when the price of gold is measured in the dollars which are pegged against the gold? Take a look at the price of gold in US dollars prior to 1971. Do you notice something? It's not jumping up and down like it is now- it is flat for long periods of times with steps. those steps represent when the government revalued the peg.

3.

Bad example. Much of the cost of milk increasing is because of both fuel rising and corn rising, two commodities which have inflated in price due to increased money supply. There is some basic supply & demand inflation as well but no monetary system in the world can regulate that nor are they supposed to.

Nickel for a pop- Yes I would like to see data representing the cost of the pop to the average wage back then and compare it to today. Keep in mind also that the pop cost more ot produce back then due to economies of scale.

If inflation were 90% caused by a fiat currency, then how could it have existed, ever, in the past?

Yes there was inflation but compared to the inflation during the fiat money systems it's child's play.

Overall, in relative comparison to every other economy in the world, we have the most stable and transparent financial system ever.

Correction: We had the best system ever. Our countries most spectacular growth period came while we had no Federal Reserve and had a gold standard. Look at our rise from a colonial back country to a superpower in the early 1900s. All gold standard thank you very much.

And now, it's only been since 1971 that we have been purely on a fiat money system. And look what's happening. Our country is losing it's status and economic prowess. It's not going to happen overnight of course.

Here's an interesting chart...

Chart

This shows average estimated price levels from 1665 to 1913 then from 1913 to 2006 using the fe'ds CPI numbers. Even if you want to argue the estimates for the period prior to 1913 are not entirely accurate, look at the tremendous spike since the creation of the Federal reserve. That's what is key here.

Next take a look at the charts in this PDF: Charts PDF

It has many interesting figures such as the number of millionaires in the US since 1850 (In 2002 dollars)

and dollars needed to value $1million 2002 dollars.

some eye opening information there

 

[ranmaniac]

Originally posted by: bamacre
But isn't this just proof that the system needs changing?

If they don't act, we have a bigger chance of a recession, but the only way to act is to lower the interest rate, which means they print more money, which means the dollar goes down even further.

I mean, it sounds to me like we are fucked either way.

Basically, or until Americans can start living within their means, and not running up credit card debt, and driving a car or live in a house they can barely afford.

 

[lozina]

Originally posted by: LegendKiller

It must be nice to live in such a black/white world, where to think that the R^2 of one independent variable explains the complete movement of a dependent variable. From a financial perspective, I'd love to work at a job where i could say "Yup, it's just FICO score, FICO is the ultimate reason why people default". Ignore the ability to pay, or macroeconomic events, ignore down payment, length of the loan, collateral, rate of prepayment, interest rates. Fuck it, just pin it all to one thing.

You know what that reminds me of? It reminds me of how a child learns. A block fits into a block hole, not a round one. Fire = burn. Water = drown (not drink).

There are no other inputs into a system than those which you want out of it. I'd love that world, since I'd still get paid a shit-ton of money for almost no work.

How did inflation *ever* exist when we had the dollar pegged to gold?

You see, this is where you fail, and will continue to do so. You eat the shit that's fed to you on blogs, yet fail to realize that they dumb it down and misrepresent the problem.

It's like explaining securitization. I got tired of having to spend 20 minutes explaining what I do and still nobody understanding it. Eventually I just explained it as a secured credit card with a balance limited to the amount of security you put into it.

Then, one of my family mentioned to another person that I work in the credit card industry. What?

It's all how you frame the situation and the simplicy of the explanation. People love to frame inflation as money supply growing faster than the economy = inflation. However, that binary explanation completely fails when considering that inflation existed way before fiat currencies. Furthermore, they fail to acknowledge that economies grow infinitely while gold does not. They fail to say that populations and wealth are inifinte and monetary supplies growing with the economy is good and outripping to avoid deflation is even better.

Ahh, to live in a juvinile world such as yours. It'd be so much better.

Ah yes, good answer. The "I'm smart you're not. I know everything because I have eternal knowledge and you know shit because you [allegedly] get your information from blogs (which apparently are written by stupid who also know shit)".

My explanation at least makes sense. You = have no explanation and your only response against it is "You're stupid I'm smart". Nice one.

 

[LegendKiller]

Originally posted by: bamacre
But isn't this just proof that the system needs changing?

If they don't act, we have a bigger chance of a recession, but the only way to act is to lower the interest rate, which means they print more money, which means the dollar goes down even further.

I mean, it sounds to me like we are fucked either way.

1. not all money released into the market represents new dollars. The Fed actually maintains a lot of currency reserves. Additionally, there are dollars out there already financing this money. All they are doing is buying or selling bonds, to add money into the system (generating liquidity) ore remove it (removing liquidity). Not all movements cause more currency in the system.

2. Yes, the system needs changing, but not the Fed system per se. I think the debt markets need to change quite a bit, especially mortgages and other consumer debts. I personally think there's a lot of legislation that needs to take place to protect consumers. The finance companies had their way in 2005, now the equation needs to be balanced.

Many blame the Fed for keeping rates too low. Sorry, but that was only part of the problem. If one looks at risk spreads, the amount of interest charged over the Fed target rates, you'll see that the risk spread contracted drastically during the 2003-2006 timeperiod. That was because there was a lot of money flooding into the system chasing fewer consumers. The money competed by dropping risk spreads and also using alternative financing.

Now that's undwinding. It isn't solely the Fed's fault, Greenspan could have prevented some of it, but not all. However, now they are completely on the hook for the rest. It's a catch 22.

 

[LegendKiller]

Originally posted by: lozina

Originally posted by: LegendKiller

It must be nice to live in such a black/white world, where to think that the R^2 of one independent variable explains the complete movement of a dependent variable. From a financial perspective, I'd love to work at a job where i could say "Yup, it's just FICO score, FICO is the ultimate reason why people default". Ignore the ability to pay, or macroeconomic events, ignore down payment, length of the loan, collateral, rate of prepayment, interest rates. Fuck it, just pin it all to one thing.

You know what that reminds me of? It reminds me of how a child learns. A block fits into a block hole, not a round one. Fire = burn. Water = drown (not drink).

There are no other inputs into a system than those which you want out of it. I'd love that world, since I'd still get paid a shit-ton of money for almost no work.

How did inflation *ever* exist when we had the dollar pegged to gold?

You see, this is where you fail, and will continue to do so. You eat the shit that's fed to you on blogs, yet fail to realize that they dumb it down and misrepresent the problem.

It's like explaining securitization. I got tired of having to spend 20 minutes explaining what I do and still nobody understanding it. Eventually I just explained it as a secured credit card with a balance limited to the amount of security you put into it.

Then, one of my family mentioned to another person that I work in the credit card industry. What?

It's all how you frame the situation and the simplicy of the explanation. People love to frame inflation as money supply growing faster than the economy = inflation. However, that binary explanation completely fails when considering that inflation existed way before fiat currencies. Furthermore, they fail to acknowledge that economies grow infinitely while gold does not. They fail to say that populations and wealth are inifinte and monetary supplies growing with the economy is good and outripping to avoid deflation is even better.

Ahh, to live in a juvinile world such as yours. It'd be so much better.

Ah yes, good answer. The "I'm smart you're not. I know everything because I have eternal knowledge and you know shit because you [allegedly] get your information from blogs (which apparently are written by stupid who also know shit)".

My explanation at least makes sense. You = have no explanation and your only response against it is "You're stupid I'm smart". Nice one.

If you're 5 your explanation makes sense. If you know nothing abuot finace, your explanation makes sense. If you want to pin everything on one person or entity for ulterior motives, your explanation makes sense.

However, educated people with no ulterior motives know that black/white doesn't exist and the R^2 to inflation and monetary supply is not 1, -1, or even .8.

 

[lozina]

Originally posted by: LegendKiller

Originally posted by: bamacre
Fed to print more money

And down goes the dollar.

And you would rather have them react how?

let's say that they don't change.


1. The stock market would decline by 500pts in the first day, probably bottom out somewhere around 11,500.

2. The financial markets would *stop*. Nobody invests into a downturn, thus nothing would happen.

3. The debt markets would stop. My own market (ABCP) would screech to a halt, everything from trade receivables to student loans would no longer be funded.

4. Even if loans got funded, it would be a 6-7% interest rate, for overnight funding. That would decreases revenues so quickly as to cause another 30-40bn in revenue write-downs from all major finance companies.

5. All major finance companies would instantly stop lending money, or jack up the rates so high as to make it impossible for anybody but essential borrowers to transact.

6. Since funding costs are high and money is difficult to find, all companies would be effected, from your local hardware store to JPMorgan. Everything would screech to a halt.

7. Massive layoffs would occur. I am not talking 1% additional unemployment over the next 24 months, but 1% over the next 3 months.

8. repeat this cycle, as the financial markets absorb the fact that 1% of the population, around 15-20 million people, just lost their job in 3 months. Bankruptcies would skyrocket, losses would skyrocket, and companies would let go more people, repeating the cycle.

9. Within 6-12 months this country would be in a depression, which would be over-corrected for, resulting in probably 5-10 years of either depression or economic malaise.


or


1. You glide the economy down, dinging the dollar, but not killing it, watching inflation but not spiking it, to an eventual mild recession and maybe even a moderate to severe one, which lasts only 6-12 months.


Dunno, sounds like they might have the right plan.

All pure speculation.

And you chastised me for being an "absolutist" and seeing everything in black & white??
Everyone one of your FUD comments listed here have absolutist terms.... nobody would... everything would .... all major ... everything would screech to a halt...

yes the old I can do it but you can't routine.

 

[lozina]

Originally posted by: LegendKiller

If you're 5 your explanation makes sense. If you know nothing abuot finace, your explanation makes sense. If you want to pin everything on one person or entity for ulterior motives, your explanation makes sense.

However, educated people with no ulterior motives know that black/white doesn't exist and the R^2 to inflation and monetary supply is not 1, -1, or even .8.

This is EXACTLY what I expect someone to say when they don't have an argument. They attack your intelligence. Yes I'm 5 now, I am very stupid. you are the genius here and we should all believe you because you are smarter and make more money.

 

[LegendKiller]

Originally posted by: lozina

Originally posted by: LegendKiller

Originally posted by: bamacre
Fed to print more money

And down goes the dollar.

And you would rather have them react how?

let's say that they don't change.


1. The stock market would decline by 500pts in the first day, probably bottom out somewhere around 11,500.

2. The financial markets would *stop*. Nobody invests into a downturn, thus nothing would happen.

3. The debt markets would stop. My own market (ABCP) would screech to a halt, everything from trade receivables to student loans would no longer be funded.

4. Even if loans got funded, it would be a 6-7% interest rate, for overnight funding. That would decreases revenues so quickly as to cause another 30-40bn in revenue write-downs from all major finance companies.

5. All major finance companies would instantly stop lending money, or jack up the rates so high as to make it impossible for anybody but essential borrowers to transact.

6. Since funding costs are high and money is difficult to find, all companies would be effected, from your local hardware store to JPMorgan. Everything would screech to a halt.

7. Massive layoffs would occur. I am not talking 1% additional unemployment over the next 24 months, but 1% over the next 3 months.

8. repeat this cycle, as the financial markets absorb the fact that 1% of the population, around 15-20 million people, just lost their job in 3 months. Bankruptcies would skyrocket, losses would skyrocket, and companies would let go more people, repeating the cycle.

9. Within 6-12 months this country would be in a depression, which would be over-corrected for, resulting in probably 5-10 years of either depression or economic malaise.


or


1. You glide the economy down, dinging the dollar, but not killing it, watching inflation but not spiking it, to an eventual mild recession and maybe even a moderate to severe one, which lasts only 6-12 months.


Dunno, sounds like they might have the right plan.

All pure speculation.

And you chastised me for being an "absolutist" and seeing everything in black & white??
Everyone one of your FUD comments listed here have absolutist terms.... nobody would... everything would .... all major ... everything would screech to a halt...

yes the old I can do it but you can't routine.

No, it would happen because it already has to a certain extent. I am sure everything looks OK from your perspective, but what happened in Aug-Oct was unprecidented in the finance world. When the bond traders went to sell a new series of 10-year bonds and didn't know what the price was it means that nobody knew what was going on in the market. The disruption of Aug was, and still is, very disturbing to many.

Simpled educated extrapolation would show that an input much larger than Aug would cause an output much larger than Aug. This would reverberate throughout the economy.

 

[heyheybooboo]

Originally posted by: Jaskalas

Topic Title: $53 Trillion and Growing

How is our debt 6 times our deficit?

The current Federal Debt is > $9.2 trillion.

The '$50 trillion' figure is a compilation of projected unfunded gov't liabilities 75-100 years in the future. There are various actuarial and statistical schemes that people use to project this number. Some folks have it a little less than $50 trillion - some folks have it much more. Some folks say that any projection over 75 years from an actuarial standpoint is pretty much useless.

My view is that people are peesing and moaning - typical - because solutions can easily be reached for everyone's future benefit. They don't want 'other people' to get credit for the solution to these unfunded liabilities.

In effect, your children and grand children are being saddled with a reduced standard of living because we cannot make the decisions that will benefit society as a whole.

I'm sure some of the AT 'economists' will correct me on this but the theory works justly:

Our standard of living today is propped up by government debt. When I was in school they taught us in Econ 101 that for each dollar the gov't spends it bounces around the economy seven times.

So our $550 billion Federal Debt last year provided a jolt of nearly $4 trillion to our economy. Not chump change when GDP is effectively $13-$14 trillion.

 

[LegendKiller]

Originally posted by: lozina

Originally posted by: LegendKiller

If you're 5 your explanation makes sense. If you know nothing abuot finace, your explanation makes sense. If you want to pin everything on one person or entity for ulterior motives, your explanation makes sense.

However, educated people with no ulterior motives know that black/white doesn't exist and the R^2 to inflation and monetary supply is not 1, -1, or even .8.

This is EXACTLY what I expect someone to say when they don't have an argument. They attack your intelligence. Yes I'm 5 now, I am very stupid. you are the genius here and we should all believe you because you are smarter and make more money.

No, it's what you get when you take one tact without recognizing that there are many shades of grey in the world. Simplistic views get simplistic treatments.

 

[Dissipate]

The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

 

[LegendKiller]

Originally posted by: Dissipate
The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

Agreed 1000%

 

[heyheybooboo]

Originally posted by: LegendKiller

Originally posted by: Dissipate
The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

Agreed 1000%

I don't totally disagree but ...

If thje Yahoo's in charge can't fix this we have no one to blame but ourselves ...

I mean, over the next 75-100 years ... total GDP of the US ... $1,300 - $1,800 trillion ???

Just wanted to put a little perspective on things ...

 

[GrGr]

Originally posted by: LegendKiller

Originally posted by: Dissipate
The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

Agreed 1000%

Not a civil war but a World War. A nuclear one this time. I don't think the US can handle going quietly into the twilight of ex empires. It will lash out in desperation.

The problem is that the US debt load is too large. $ 53 Trillion W... T... F... What can you buy for $ 53 Trillion? It is simply beyond reality and into infinity territory already.

If the rest of the world went with a check for $ 53 Trillion to Uncle Sam and said: Hello Mr Uncle Sam Sir, could you kindly cash this check for us?

What would happen? There is like NOTHING that can be counted as that valuable in the entire US unless you more or less sell the whole of the US lock stock and barrel. The dollar has already reached infinity, or so much towards infinity it's value now is totally fake. This means for all intents and purposes the US dollar already is a broken fiat instrument.

 

[bamacre]

Originally posted by: GrGr

Originally posted by: LegendKiller

Originally posted by: Dissipate
The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

Agreed 1000%

Not a civil war but a World War. A nuclear one this time. I don't think the US can handle going quietly into the twilight of ex empires. It will lash out in desperation.

The problem is that the US debt load is too large. $ 53 Trillion W... T... F... What can you buy for $ 53 Trillion? It is simply beyond reality and into infinity territory already.

If the rest of the world went with a check for $ 53 Trillion to Uncle Sam and said: Hello Mr Uncle Sam Sir, could you kindly cash this check for us?

What would happen? There is like NOTHING that can be counted as that valuable in the entire US unless you more or less sell the whole of the US lock stock and barrel. The dollar has already reached infinity, or so much towards infinity it's value now is totally fake. This means for all intents and purposes the US dollar already is a broken fiat instrument.

:thumbsup:

 

[Jaskalas]

Originally posted by: heyheybooboo
I'm sure some of the AT 'economists' will correct me on this but the theory works justly:

Our standard of living today is propped up by government debt. When I was in school they taught us in Econ 101 that for each dollar the gov't spends it bounces around the economy seven times.

So our $550 billion Federal Debt last year provided a jolt of nearly $4 trillion to our economy. Not chump change when GDP is effectively $13-$14 trillion.

Sounds like an argument for more government. I'm rather confident the same positives you cite would also apply to private spending if we kept our money out of bankrupt hands.

 

[CitizenKain]

Originally posted by: lozina


Correction: We had the best system ever. Our countries most spectacular growth period came while we had no Federal Reserve and had a gold standard. Look at our rise from a colonial back country to a superpower in the early 1900s. All gold standard thank you very much.

There is no chance, whatsoever, that our growth was due to leaving a primarily agricultural economy to a primarily industrial one. Or from the better use of natural resources and a growing population. Nope, it was due to shiny rocks. Nothing else.

 

[CitizenKain]

Originally posted by: Dissipate
The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

So the solution is....? Tell us wise college anarchist.

 

[TheSlamma]

Well a huge portion of it's citizens are in debt too. Guess the gov is just like it's people.

 

[FoBoT]

Originally posted by: CitizenKain

Originally posted by: Dissipate
The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

So the solution is....? Tell us wise college anarchist.

be sure to have plenty of guns/ammo/food on hand when the shit hits the fan

 

[BoberFett]

Originally posted by: CitizenKain

Originally posted by: Dissipate
The political class will destroy this country. I have said it before and I will say it again: politicians do not care about you or your future. They take office for a quick power grab and will continue to rape your wages away while they play golf, and broker corrupt deals. Every single government in the entire history of the world has done this, the U.S. government will continue to do it until the economy is destroyed and or a civil war breaks out.

So the solution is....? Tell us wise college anarchist.

What's yours? Spend more?

 

[heyheybooboo]

Originally posted by: Jaskalas

Originally posted by: heyheybooboo
I'm sure some of the AT 'economists' will correct me on this but the theory works justly:

Our standard of living today is propped up by government debt. When I was in school they taught us in Econ 101 that for each dollar the gov't spends it bounces around the economy seven times.

So our $550 billion Federal Debt last year provided a jolt of nearly $4 trillion to our economy. Not chump change when GDP is effectively $13-$14 trillion.

Sounds like an argument for more government. I'm rather confident the same positives you cite would also apply to private spending if we kept our money out of bankrupt hands.

Not at all. I think public/private spending (and the '7x Factor') is fungible for the most part.

The problem with supply-side theory is that it never really has provided for the interest that has been paid - and has been obligated for the future. Since 1980 nearly $8 trillion in interest has been paid on the Federal Debt. That's alot of tax dollars.

In the next few years our annual interest expense on the Federal Debt will exceed $400 billion and continue to rise each year thereafter.

Gov't intervention/spending was needed in 2001 because of 9/11 and the slight recession. It put $$$ in people's pockets and stablized the economy. That's good gov't fiscal policy (and I'll bite my tongue and say 'good gov't debt').

The problems really started in 2002 with more tax cuts. The economy was recovering - but gov't spending exploded and we went to war 'wide-open' in Afghanistan. Paygo expired (whereby tax cuts or increases in spending had to be 'balanced' within the federal budget) and earmarks went through the roof.

In a span of rwo years we had gone from a nearly balanced budget to $400 billion debt principle (and worse!) a year.

It got worse is 2003. More tax cuts coupled with war in Iraq, the Drug Program and more gov't expansion (NCLM, etc) ... Federal debt principle ballooned to $550 billion/yr!

Never before had such great spending and military actions been undertaken without some rational idea of how to pay for it - much less cut taxes while doing it.

It was (and is) supply-side economics on a suicide run. Anyone who trys to defend it these days is just a loon.